Thursday, November 6, 2014

Cornel Ban on doctrine shift in the IMF

In a new Working Paper, GEGI's co-director Cornel Ban discusses recent shifts in IMF doctrinal policy as a result of the financial crisis. He argues that well-informed countries now have more ability to negotiate their fiscal policies and dictate their own terms while utilizing IMF funding.

These policy shifts are of critical importance to
emerging economies that seek to maintain their autonomy while engaging
with international

During the 1980s the IMF
emerged as a global "bad cop," demanding harsh austerity measures in
countries faced with debt problems. Has the Great Recession changed all
that? Is there more room to negotiate with the Fund on fiscal policy?

The answer is yes. If we
take a close look at what the IMF researchers say and what its most
influential official reports proclaim, then we can see that there has
been a more "Keynesian" turn at the Fund. This means that today one can
find arguments for less austerity, more growth measures and a fairer
social distribution of the burden of fiscal sustainability. The IMF has
experienced a major thaw of its fiscal policy doctrine and well-informed
member states can use this to their advantage.

These changes do not
amount to a paradigm shift, a la Paul Krugman's ideas. Yet crisis-ridden
countries that are keen to avoid punishing austerity packages can
exploit this doctrinal shift by exploring the policy implications of the
IMF's own official fiscal doctrine and staff research. They can cut
less spending, shelter the most disadvantaged, tax more at the top of
income distribution and think twice before rushing into a fast austerity
package.

This much is clear in
all of the Fund's World Economic Outlooks and Global Fiscal Monitors
published between 2009 and 2013 with regard to four themes: the main
goals of fiscal policy, the basic options for countries with
fiscal/without fiscal space, the pace of fiscal consolidation, and the
composition of fiscal stimulus and consolidation.

About Me

As a kid I liked numbers and the sound of strings. I considered studying engineering but chose social sciences because of my interest in people. I combine a theoretical interest with a practical, social approach which brought me to the sphere of policy research. I am interested in reducing the disparity between poor and rich, between the powerful and the less powerful.
In 1973 and 1982 I lived in Latin America. In the mid-1980s, I was able to create an international forum to discuss the functioning of the international monetary system and the debt crisis, the Forum on Debt and Development (FONDAD). I established it with the view that the debt crisis of the 1980s was a symptom of a malfunctioning, flawed global monetary and financial system.
I was one of the driving forces behind the creation of the European Network on Debt and Development that was established at the end of the 1980s to help put pressure on European policymakers.
In 1990, before the beginning of the Gulf War, I cofounded the Golfgroep, a discussion group about international politics comprising journalists, scientists, politicians and activists that meets regularly.
The website of FONDAD is www.fondad.org